Ok, I'll try and keep this as brief as possible.
2 years ago I bought an old house on a large block of land for almost $400k with a 20% deposit.
Last month I put in an offer (subject to finance) to buy another house for almost $430k. My plan was to use the increased equity in my existing property to buy the new one at 80%, possibly chipping in money myself. Unfortunately I also changed jobs in May (same industry, no probation, higher pay).
I'm a long-time CBA customer and had previously gotten a preapproval for them for a much higher amount (almost $600k) so I thought this new loan was well with my servicing capacity and reasonably conservative.
So I apply for the loan and several things come up:
1. I discovered there was an unpaid summons on my credit file. Basically the council (for my first house) mistakenly issued a summons for rates payment. They admitted they'd stuffed up and I thought it had been dealt with. The council has since filed papers such that the summons has been withdrawn and its no longer on my record after I filed a request with Veda Advantage;
2. Virgin were still sending me credit card statements in May for an accunt I closed in January thanks for an 18 cent balance; and
3. My employer isn't in the White Pages (mobile office, VoIP, etc).
Now CBA were happy when I explained all this. Then the valuatin on my house came back at a staggering $410k.
Now I know bank valuatins are conservative so was expecting $450k, maybe $435k but not $410k. To put it in perspective: my house is a 70s 3x1 (double brick and tile) on an >800sqm block. Last year, 450sqm blocks with no house were selling for $330k two blcks away on the same street. Granted we've had a correction of sorts but I'd put the land value alone of my place in the high 400s.
Thus the only way I could buy the new place was with a greater than 80% LVR (or come up with $100k some ther way) and it went to the mortgage insurer. They saw my summons and my explanation but ultimately declined me LMI on the grounds that:
- I had a summons; and
- My employer isn't in the White Pages (it's actually hard to get in the White Pages unless you have a Telstra landline).
Now I also think that CBA went around this the wrong way: they wanted to effective combine my lans such that the mortgage insurer (Genworth) were insuring the bank on loans of almost $700k.
So at this stage I went to a mortgage broker who has taken my application to BankWest. I've taken out a line of credit with CBA on the small amount of equity I can use in my first house (to save doing another valuation on it), which was approved so instead of a 90% LVR on $700k I'd be looking at a 95% LVR on $400k for LMI purposes.
On Friday the new bank (BankWest) came back with a decline on the grounds of time in new job and number of credit applications in the last 6 months. The credit applications thing is the part that irks me since I have a copy of my credit file (after sorting out the summons nonsense) and they are:
- Credit card in Feb for balance transfer that I didn't take up and the account was closed;
- Preapproval with CBA in April;
- CBA twice in June for home loan;
- Genworth in June.
So, excluding the home loan, theres been only one thing in the last 6 months. Last year there was a credit card and my margin loan and that's it.
Now the broker has kicked this upstairs to a credit manager to look at but I'm really getting the feeling this is going to fall apart because even if the bank accepts it, I'm not sure the mortgage insurer will accept it (this bank goes to both PMI and Genworth). Also the LMI quote is over $8000.
So CBA were happy to lend me the money but their insurer wasn't and I'm already having trouble getting across the line with the new bank.
To give you an idea of the serviceability of these loans, my existing loan is fixed at 7.6% interest only until 2011. With current interest rates, could borrow the entire amount and service both loans (including $300pw rental on the other place minus expenses) and have over $4000 left over each month.
Are there any other options?
2 years ago I bought an old house on a large block of land for almost $400k with a 20% deposit.
Last month I put in an offer (subject to finance) to buy another house for almost $430k. My plan was to use the increased equity in my existing property to buy the new one at 80%, possibly chipping in money myself. Unfortunately I also changed jobs in May (same industry, no probation, higher pay).
I'm a long-time CBA customer and had previously gotten a preapproval for them for a much higher amount (almost $600k) so I thought this new loan was well with my servicing capacity and reasonably conservative.
So I apply for the loan and several things come up:
1. I discovered there was an unpaid summons on my credit file. Basically the council (for my first house) mistakenly issued a summons for rates payment. They admitted they'd stuffed up and I thought it had been dealt with. The council has since filed papers such that the summons has been withdrawn and its no longer on my record after I filed a request with Veda Advantage;
2. Virgin were still sending me credit card statements in May for an accunt I closed in January thanks for an 18 cent balance; and
3. My employer isn't in the White Pages (mobile office, VoIP, etc).
Now CBA were happy when I explained all this. Then the valuatin on my house came back at a staggering $410k.
Now I know bank valuatins are conservative so was expecting $450k, maybe $435k but not $410k. To put it in perspective: my house is a 70s 3x1 (double brick and tile) on an >800sqm block. Last year, 450sqm blocks with no house were selling for $330k two blcks away on the same street. Granted we've had a correction of sorts but I'd put the land value alone of my place in the high 400s.
Thus the only way I could buy the new place was with a greater than 80% LVR (or come up with $100k some ther way) and it went to the mortgage insurer. They saw my summons and my explanation but ultimately declined me LMI on the grounds that:
- I had a summons; and
- My employer isn't in the White Pages (it's actually hard to get in the White Pages unless you have a Telstra landline).
Now I also think that CBA went around this the wrong way: they wanted to effective combine my lans such that the mortgage insurer (Genworth) were insuring the bank on loans of almost $700k.
So at this stage I went to a mortgage broker who has taken my application to BankWest. I've taken out a line of credit with CBA on the small amount of equity I can use in my first house (to save doing another valuation on it), which was approved so instead of a 90% LVR on $700k I'd be looking at a 95% LVR on $400k for LMI purposes.
On Friday the new bank (BankWest) came back with a decline on the grounds of time in new job and number of credit applications in the last 6 months. The credit applications thing is the part that irks me since I have a copy of my credit file (after sorting out the summons nonsense) and they are:
- Credit card in Feb for balance transfer that I didn't take up and the account was closed;
- Preapproval with CBA in April;
- CBA twice in June for home loan;
- Genworth in June.
So, excluding the home loan, theres been only one thing in the last 6 months. Last year there was a credit card and my margin loan and that's it.
Now the broker has kicked this upstairs to a credit manager to look at but I'm really getting the feeling this is going to fall apart because even if the bank accepts it, I'm not sure the mortgage insurer will accept it (this bank goes to both PMI and Genworth). Also the LMI quote is over $8000.
So CBA were happy to lend me the money but their insurer wasn't and I'm already having trouble getting across the line with the new bank.
To give you an idea of the serviceability of these loans, my existing loan is fixed at 7.6% interest only until 2011. With current interest rates, could borrow the entire amount and service both loans (including $300pw rental on the other place minus expenses) and have over $4000 left over each month.
Are there any other options?